Missed Gati & TCI? You Can Make Up With Snowman Logistics IPO

Infra stocks are hot and within that space, logistics stocks are red-hot. Snowman Logistics IPO is a good opportunity to tuck into a dominant logistics company run by reputed promoters and at reasonable valuations say market Pundits

First of all, you must note that the savvy investors are making a bee-line for logistics stocks.

Prashant Jain of HDFC Mutual Fund staked his claim on Sanghvi Movers, bringing the beleaguered stock back into the radar of investors after it had been unceremoniously booted out by ICICI-Direct.

Ramesh Damani, the Nawab of Dalal Street, has a soft corner for PSU stocks. So, he put his money on Balmer Lawrie. Ramesh Damani fondly described Balmer Lawrie as a “fool proof” business, suggesting that the company would thrive despite all mismanagement.

Now, if you have been left high and dry without a single logistics stock in your portfolio, you don’t have to despair because Snowman Logistics IPO is here to give you the opportunity.

Daljeet Kohli and Santosh have carefully dissected the innards of Snowman Logistics to check whether any dangers lie lurking there. Luckily, there are none and the duo has given the green signal to us to invest in the stock.

(ii) Low Debt: Unlike other infra companies which are reeling under heavy debt, Snowman Logistics has a low debt:equity ratio of 0.5x pre-IPO and 0.1x post-IPO;

(iii) Huge business opportunity: The increased government thrust towards Cold Storage with a view to preventing wastage of food grain means that there is huge scope for Temperature Controlled logistics business. The Temperature controlled Cold Storage business is reporting 15-20% growth in the last few years and has huge growth potential;

(iv) Snowman Logistics is a dominant player: At FY14-end, Snowman Logistics had 23 temperature controlled warehousing facilities at 14 locations across the country (including Mumbai, Chennai, Bengaluru and Kolkata). It has reported 53% CAGR capacity growth during FY11-14. At FY14-end, Snowman Logistics had 370 reefer vehicles (307 of them leased and 63 owned);

(v) Valuations: On a post-issue basis, at FY14 EPS of Rs 1.4, at upper price band of Rs 47, Snowman Logistics’ offer is being made at a P/E multiple of 34.0x. While this is by no means “cheap”, it is also not unreasonable considering the valuations of its peers such as Gati, AllCargo and Concor, which have smaller exposure to the fast growing Cold Storage space.

So, there you have it. Don’t let the high P/E of 34x deter you. However, given that only 10% is reserved for retail investors, it will be quite a challenge to get a decent quantum of the stock.

7 Comments

The topic should have been missed GATI AND TCI? make it up with KESAR TERMINALS(KTIL)- will tel you why- kesar terminals in terms of balance sheet roce levels > 45 , ROE> 26, PAT margins > 31….better than GATI, better than TCI, pe only of 11 as of now, even if snowman logistics listing price is 50, the p/e comes to a clean 26-27, Kesar terminals has a reputed management pedigree and are now opening Kesar multimodial logistics which will be a game changer…at a pe of 30 (less for logistic space) it comes to 700rs per share.Its a clean buy and the cheapest in logistic space (in nse /bse) with lucrative valuations. will quote 1000rs soon.

I hope readers here will do their due diligence before buying Kesar Terminals. Some other person had posted a link to a so-called “research report” on this KTIL, and it was to an anonymous link, not to a research house or broking house report. Be careful people.

3 months back firstcall research gave a buy call on this scrip, Devdas mogili of moneytimes-paid subsrciption gave a buy call for a target of 400rs. Its valuations are indeed good, join us in valuepickr.

dont go by the research report, KTIL got demerged from kesar enterprises few years back. kesar logistics is already in full swing, valuations are goods enough when compared to other logistics. one can stay invested in ktil for long term. firstcall also gave a buy(is that bogus, guess not).

snowman got listed with a bang. already a p/e of 40 odd. logisti space is definitely doing very well in india. great future for all these companies. gati is also a good pick.
checked kesar logistics, valuations are attractive,will wait and see how this company operates its logistics business in time to come.I have a very small percentage holding.All the logistics space will do very well.

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